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Counterproductive counternarcotic strategies? A study of the effects of opium eradication in the presence of imperfect capital markets and sharecropping arrangements

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  • Andersson, Camilla

    () (Department of Economics, Umeå University)

Abstract

In this paper, we model the economic incentives surrounding opium crop production at farm level in Afghanistan. Specifically, we examine the impact of eradication policies when opium is used as a means of obtaining credit, and when the crops are produced in sharecropping arrangements. The theoretical analysis suggests that when perfect credit markets are available, an increased risk of having the opium poppy eradicated will lead to less land being allocated to opium poppy. Thus, with perfect credit markets, the eradication policy is likely to have the intended effect of lowering opium crop production. However, when opium is sold on futures markets as a means of obtaining credit, the effects of opium eradication are no longer clear-cut: in some cases the outcome may actually increase the land allocated to opium poppy. Finally, the results indicate that when opium is produced in sharecropping arrangements, increased risk of opium eradication will unambiguously make the tenants worse off, while landlords may actually benefit.

Suggested Citation

  • Andersson, Camilla, 2010. "Counterproductive counternarcotic strategies? A study of the effects of opium eradication in the presence of imperfect capital markets and sharecropping arrangements," Umeå Economic Studies 809, Umeå University, Department of Economics.
  • Handle: RePEc:hhs:umnees:0809
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    Cited by:

    1. Clemens, Jeffrey, 2013. "Evaluating Economic Warfare: Lessons from Efforts to Suppress the Afghan Opium Trade," MPRA Paper 57890, University Library of Munich, Germany.

    More about this item

    Keywords

    Opium; Eradication; Futures markets; Sharecropping;

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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